The Research On CPA Audit System Based On Litigation Risk

In China, CPA Audit System started lately. Although it has made considerableprogress in the last few years and been showing a trend of convergence with theinternational auditing standard, there is still a lot of shortcomings. With lots ofauditing failures come out，CPAhas to deal with more and more Litigation problems.Therefore, Litigation risk becomes a essential factors in the audit process. However,with the increasing litigation risk, CPA’s consciousness of litigation risk does notemerge significantly. Therefore, it is necessary to analysis the situation of auditsystem, explore a new audit method which reflects litigation risk,, then improve theaudit system and provide high quality audit service finally.The purpose of this paper is give a series of suggestions to improve the CPAAudit System. therefore, the paper analysis the relationship between litigation riskand CPAaudit system, and situation of CPAaudit system.Specifically, the research significance of this paper mainly shows in thefollowing aspects: Firstly, it is good to deepen theoretical research and understand therelationship between the litigation risk and CPA audit system. Secondly, it couldimprove the audit quality. A series of measures, for instance, improve relevant lawand audit method, could improve the sense of risk and responsibility of the CPA andaccounting firm, then enhance the reliability of the audit report. Thirdly, it couldimprove the fair competition in the audit market, safeguard the interests of all parties.Generally speaking, this paper can be divided into six parts. The first part is theintroduction. The second part is a summary about the theories of this thesis, whichthoroughly summarize the home and abroad research status. The second part is asummary about the theories of this paper, which mainly analysis of the relationshipbetween the litigation risk and each part of CPA audit system. This part lay thefoundation for later study. The third part analysis the present situation of the CPAaudit system based on litigation risk. The forth part suggest to establish a new CPAaudit model based on litigation risk. The fifth part give a series of suggestions toperfect the CPA audit system based on litigation risk. At last, this paper summarizethe research results and deficiencies.In this paper, the innovation point is establishing a new CPA audit method,using layer analysis method to quantitative audit risk, and combining with case study.